Taking place shortly after The Dream Master, Alice (Lisa Wilcox) and Dan (Danny Hassel) have now started dating and there is no sign of Freddy Krueger (Robert Englund). Alice begins to have dreams of a young nun, with a name tag for "Amanda Krueger", being locked away in an asylum full of maniacs. Upon graduating from high school, Alice and Dan plan their getaway to Europe. Alice has made some new friends: Greta (Erika Anderson), a supermodel in training, Yvonne (Kelly Jo Minter), a future Olympic diver, and Mark (Joe Seely), a comic geek.